"Saving every penny for customers", Mr. Sam Walton injected this "gene" into Wal-Mart at the beginning of its business
Therefore, Wal-Mart has always been synonymous with "cheap", and it is also the famous king of cost performance. However, according to the latest survey data, Wal-Mart has "lost" the price of goods to Amazon.
Just past the end of 2022, Amazon announced that small and medium sellers (SMBs) had sold 5 billion items in the US alone. (Scan the code at the end of the article to enter the selected seller group)
Behind these 5 billion commodities, low selling prices are an important driving force.
Recently, the data analysis agency Profitero tracked the "daily online prices" of 13 e-commerce platforms in the United States, including Wal-Mart, Amazon, Wayfair and other platforms.
It turns out that the one with the lowest price is not Wal-Mart, the king of cost-effectiveness, nor vertical e-commerce platforms such as Wayfair and Chewy, but Amazon.
How much lower are Amazon's product prices than peer e-commerce platforms? 13% lower on average.
That's a pretty big range.
This also confirms the success of Bezos' "flywheel model": lower prices – better customer experience – more sellers supply – then "lower prices". In this cycle, more and more items are sold.
At present, Amazon's flywheel has "touched" at least 2 million active sellers, allowing them to fully compete. The listings "strangle" each other, resulting in a substantial reduction in commodity prices, and finally benefiting consumers.
So how much lower are Amazon's prices than Walmart's? Or, how much more expensive is Walmart than Amazon?
The Profitero study found that Amazon’s prices are on average 6% cheaper than Walmart’s.
Specific to different product categories, there are differences.
In the clothing category, Wal-Mart lost almost all the way to Amazon, with prices 12% higher than Amazon. Walmart is also more expensive than Amazon in other categories.
In beauty and toys, Walmart is 3% more expensive than Amazon, small appliances are 5% more expensive than Amazon, electronics are 9% more expensive, baby supplies are 4% more expensive, and pet supplies are 2% more expensive.
Also, in 2022, Walmart loses its edge over Amazon in tools and home improvement.
Of course, it’s not just Wal-Mart that Amazon has won. Its low prices have also crushed major e-commerce platforms such as Target, Wayfair, Chewy, and Home Depot.
Even in verticals like pets, home improvement, tools, etc. , Amazon can compete with professional, vertical platforms without falling behind.
For example, in the category of pet products, Amazon competes with the pet product platform Chewy and maintains the same price level in many categories, while the furniture price of Wayfair, a representative platform of furniture e-commerce, is 37% higher than that of Amazon.
Of course, it must be noted that this is an average. Most of the heavy furniture on Wayfair's platform is bulky, which also drives up the price.
Moreover, Amazon has a greater advantage compared to other comprehensive platforms.
In some categories, Target was 16 percent more expensive than Amazon, while the baby category was 7 percent more expensive, beauty 6 percent more expensive, toys 6 percent more expensive and health and personal care 14 percent more expensive.
Macy's, on the other hand, is losing ground in categories like appliances, fashion, home furniture and toys, where prices are on average 38% higher than Amazon.
How does Amazon manage to keep prices so low?
Amazon is an infinite shelf that attracts millions of active sellers selling on it, with hundreds of millions of listings.
How many products are listed on Amazon? The specific figures are unknown, but some clues can be seen from the side.
Amazon has publicly stated that in 2021, the system blocked 4 billion bad product listings on its platform, and in 2020 it blocked 10 billion bad product listings.
It can be seen that Amazon's listing is calculated in billions.
Amazon holds the largest e-commerce traffic portal, with at least 2 million active buyers. Under its flywheel mechanism, there is sufficient competition between sellers and commodities. Then, the price must return to the lowest level – the bottom line is the lowest profit that the seller can maintain.
But in reality, sometimes this bottom line cannot be adhered to, because there are still a group of sellers active on Amazon who "kill opponents with low prices" and "do charity first for ranking".
Amazon maintains low prices externally, but logistics costs rise and CPC costs drop slightly
Amazon keeps its external prices low to please consumers, but internal costs for sellers are rising.
Amazon’s fulfillment costs have increased by more than 30% since 2020, according to Marketplacepulse.
Amazon adopted the model of "boiling frogs in warm water" to raise prices, and went up little by little, so that sellers slowly accepted the facts in the "nervous slowness".
In 2023, Amazon will charge $4.75 to deliver a pound of goods, compared with $3.48 in 2020, an increase of nearly 40%.
Overall, in 2023, Amazon's delivery costs for small items will increase by about 30%, and delivery costs for large and heavy items will increase by 20%.
Fortunately, though, Amazon’s ad prices have dropped.
On the whole, the click price of CPC advertisements in 2022 is slightly lower than that in 2021.
Taking Meizhan as an example, the average CPC price in November was $1.06, down from $1.24 a year ago. Furthermore, the average cost of advertising sales (ACoS) will remain at 22% in 2022, while the average conversion rate will remain at around 14%.
This means that the average cost of sales for North American sellers in 2022 will be $7-8, down from 2021 ($9-10) but higher than 2020 ($6-7).
This means that, at an average price of $1.06, it takes 7 clicks to generate an order.
Although it is difficult, Chinese sellers have shown tenacious vitality.
Since the title was published in 2021, sellers in China have suffered heavy losses, and at one point gave up the market share of Amazon.com to sellers from other countries.
However, the vitality of Chinese sellers is tenacious. At the end of 2022, Chinese sellers began to regain lost ground.
In February 2021, the share of Chinese sellers dropped to 40% from 42.4% a year ago, but in December 2022, the share of Chinese sellers rose to 45%.
Walmart and Amazon compete for sellers
Ever since Walmart started hiring sellers in China, it has been grabbing sellers from Amazon.
Data shows that since March 2021, many Chinese sellers have opened stores on Walmart's e-commerce platform, and the number will reach 6,000 by the end of 2021.
By the end of this year, more than 25,000 Chinese sellers had opened stores on Walmart. Among the new Walmart sellers, Chinese sellers accounted for about 40%.
Walmart robs Amazon's sellers, and Amazon in turn robs Walmart's sellers.
Currently, about 35% of active sellers on the Walmart e-commerce platform will also join the Amazon platform in 2022.